Why New Clearing charges on FNO?


#1

Hi

I never ever show Clearing charges on FNO segment but from last few days i am noticing there is new ‘’ Clearing charges ‘’ in contract note.

Why we need to pay clearing charges.It was never mentioned before to us !

Can you plz explain about the new charge.

Thanks


#2

Yeah! What is this new Clearing charge in ZERODHA FNO contract notes? It was’nt there in last month’s contract note which I just saw inorder to compare. Why was’nt any notification sent regarding this hidden charge?


#3

As per the Zerodha Brokerage Calculator, the clearing charges are supposed to be 0.0002% of turnover on NSE F&O and Exchange Trnasaction Charges at 0.0019%.

But, since the first day of this new contract note, the clearing charges are charged higher than that in the contract notes.

I suspect there is a calculation error in the new contract note.


#4

I feel zerodha is finally feeling pricing pressure of 20 rs. brokerage and trying new hidden ways to charge clients which may be more than the brokerage it self

i paid 122 rs. of clearing charge in one day !

@nithin plz. explain it to everyone…Why it was not communicated to us that we are likely to pay new charge on trade.


#5

On writing to Zerodha.support, I go the following reply which doesnt explain why the clearing charges are higher than 0.0002% as mentioned on brokerage calculator.

"Clearing charge is the fee charged by the Clearing Member of NSCCL. A clearing member has the responsibility of clearing and settling all F&O trades done by the client on the exchange.

Previously, the clearing charges were shown along with transaction charges, however, from 1st April 2018, this charge will be displayed separately for better clarity.

Do note that this does not add an additional cost to you and is only a breakup of the existing charges.
"


#6

Explained here
https://support.zerodha.com/category/account-opening/charges-at-zerodha/articles/what-are-clearing-charges


#7

The clearing charge has been from the day 1 of the business. Until April this year, this was shown combined along with exchange transaction charges. We have started showing it separately to bring in more transparency.

Almost every broker uses a clearing member for his trades, and hence there will be clearing member charges additionally. We are the lowest on this again compared to everyone else out there. As we grew bigger, this cost for us has come down significantly. It is 0.0002% for futures and 0.002% on options premium, which as you’d realize is extremely small. Other brokers charge between 0.0002% to 0.001% and 0.002% to 0.01% respectively. Many of them towards higher end of this range.


#8

I find the clearing charges in my contract notes at 0.0002001% every day since the introduction of the new contract note.

So, I dont think it is a rounding error but it seems to be a small calculation error in the new contract notes.

Also, the exchange transaction charges are correct at 0.0019% and exact for all days since then. No error even at the second decimal point there.

I have raised a support ticket but this is not being addressed since over a week.

The issue is not about me overpaying a few rupees in clearing charges. The issue is of books of accounts not matching.

I am looking forward to some clarity on this. :expressionless:


#9

Thanks @nithin for clarification and not adding any new charges on us.

Now i can die peacefully .


#10

Ok then it’s good. Transparency is good!


#11

Dear Nithin,

From above blog:

“Clearing Fees is neither statutory levies nor Regulatory levies/charges. Payment made to Clearing Corporation cannot be equated with payments made to Professional Clearing Member or Trading Cum Clearing Members.”

“As the Regulations / Circulars stands today, No other charges except 1 to 7 above, can be recovered by any Stock Broker from its client. Hence the only inescapable inference is that PCM Fee cannot be levied / charged from the trading clients.”

Why is there such a gray area/charges in brokerage industry? Whom should be contacted (SEBI or NSE) for clarification.

  1. Clearing Charges
  2. Stamp duty - some people take as per client’s residential state and others as per Office location.( Even zerodha used to take karnataka stamp duty when there was cap; For other state people also it used to be 50/- if I am correct)

thanks and regards


#12

Most brokers use professional clearing members, this helps mitigate broker risk significantly as well. The above broker who you have linked is a self clearing member. If a professional clearing member charges us for trade we can pass that charge onto the client. This is declared in our charge sheet which client agrees on while opening an account.

https://zerodha.com/charges

About stamp duty, when we started the business we had taken a view that since we are located in Bangalore and everything happens from here, we will charge as per Karnataka stamp act. But soon, we started receiving notices from the various state governments asking us to pay for clients from their state. We changed our policy post that. I think it is a huge risk for broker to not collect as per client state, there can be severe repercussions from the state government (the penalty is 100%, and it will not be possible for broker to go back to client and collect more stamp duty).


#13

Thanks Nithin…

There seems to be a issue in either sample contract note generator or real bug…

below is another broker charges… (please focus only on transaction charges CDS 50 lots USDINR)

below is zerodha

Transaction is shown 63.

why should there be difference in exchange transaction charge between brokers when clearing charges are explicit? It could be possible that they might have a bug.

Please check and confirm.

( I checked with few other brokerage calculators, they are also showing it as 63 same as zerodha. Most likely, above one (*****stox) is having a bug in generation. I will not delete this reply as it might help others.)


#14

https://zerodha.com/charges

Exchange txn charge is 0.0009% or Rs 90 per crore. For a 70lk transaction it is Rs 63. Looks like the screenshot you posted from the other broker has a bug.


#15

Yes, the Upstox brokerage calculator has a bug. The transaction charge listed is inclusive of clearing charge. But clearing charge is listed again as a seperate item.

BTW, For CDS, clearing charge in zerodha is 20 per cr . But in upstox it is 40 per crore. Interestingly, for MCX, upstox charges half the clearing charge of what zerodha charges.